Apple Inc. (AAPL) iPhone X Could Pose Near-Term Shipment Volatility, Facebook Inc (FB) Newest NFL Alliance May Fire Up “Serious” Video Ad Dollars

MIzuho probes into AAPL's risk for iPhone X production constraint; Cantor commends FB's video evolution.


Apple’s Risk/Reward Swings at an Even Balance  

Apple Inc. (NASDAQ:AAPL) may be a tech empire that has stood the test of time- for now. Yet, one voice on Wall Street is pointing out some short-term concern when it comes to the newest, buzzy iPhone X, the 10th anniversary edition of the tech titan’s first ever iPhone to hit the market.

Mizuho analyst Abhey Lamba checked in with his research team in Japan, which has interestingly enough boosted 2017 total procurement expectations, forecasting a rise in production from older LCD models to offset OLED numbers. These supply chain checks point to “stronger demand at [the] lower-end,” says Lamba, who is simultaneously wary of “production constraints for X.” The Japan team has likewise cut back on iPhone X production projections for 2017 by almost 20% to 38 million units while lifting LCD model estimates for 4.7″ models by 9% and for 5.5″” models by 3%.

Lamba continues, “We believe this is likely to create some volatility around n-t shipment estimates on constrained supply going into MarQ. In particular, we think there could be some risk to DecQ estimates as higher ASP units get pushed out to CY18 in addition to some softness in iPhone 8.”

Though Apple did offer encouraging fourth fiscal quarter guidance, the analyst expects management factored in prospective “demand softness” in its outlook. “That said,” Lamba notes, “there could be some pressure to F1Q guidance on the back of: 1) iPhone X push-outs to MarQ, thereby, weighing on ASPs; 2) weaker iPhone 8/8+ upgrade activity given the incremental feature set; 3) incrementally higher mix of 7/7+ putting some pressure on ASPs.”

True, Apple’s legacy stands for itself, a powerful brand, which the analyst certainly recognizes; but not without some wariness lingering in the mix: “We acknowledge the company’s strong franchise value; however, risk-reward seems balanced at current levels. We also remain cautious about the potential for current/prospective customers delaying purchases in anticipation of OLED SKUs at lower price points next year,” contends Lamba.

As such, the analyst reiterates a Neutral rating on AAPL stock with a $150 price target, which represents a 2% downside from where the shares last closed. (To watch Lamba’s track record, click here)

Is Lamba crashing the bullish party on Wall Street with his sidelined stance? TipRanks analytics exhibit AAPL as a Strong Buy. Out of 35 analysts polled by TipRanks in the last 3 months, 31 are bullish on Apple stock, while 2 remain sidelined, and 2 are bearish. With a return potential of nearly 15%, the stock’s consensus target price stands at $193.81.

Facebook Steps Up its Video Ad Initiative with Enticing New NFL Deal

Facebook Inc (NASDAQ:FB) continues to put its best video advertising foot forward, with its platform now benefiting from a newly struck two-year alliance with the NFL, now adding highlights and enticing clips to the video table.

Cantor analyst Kip Paulson chimes in with a bullish take, believing “the largest social platform” is poised to reap the financial benefits from this video advertising deal- one that further shows how this social media titan knows just how to play the evolution game.

Following the news, the analyst cheers that this collaboration “boosts video ad efforts,” maintaining an Overweight rating on shares of FB with a price target of $190, which implies a 12% upside from where the stock is currently trading. (To watch Paulson’s track record, click here)

Paulson explains, “This deal is another tailwind for CPMs. FB’s price per ad already accelerated to +24% Y/Y in 2Q17 (vs. +14% in 1Q17), and high-caliber sports content should provide further boost. FB’s ID graph will also enable high-quality targeting.”

Ultimately, this will bode well for Facebook, the analyst concludes, asserting: “With this deal in place, partnerships with nearly 20 other video publishers, and a mid-roll video ad format (testing since Feb), we believe Facebook is now primed for more-serious video ad dollars. FB is rapidly evolving into a video distribution platform and an even-more important partner for brands, which we expect to result in higher CPMs that counteract ad load constraints in 2H17.”

The Cantor analyst is not the only bull in the social media titan’s court, as TipRanks analytics demonstrate FB as a Strong Buy. Based on 35 analysts polled by TipRanks in the last 3 months, 31 rate a Buy on Facebook stock, 2 maintain a Hold, while 2 issue a Sell on the stock. The 12-month average price target stands at $193.81, marking a nearly 15% upside from where the stock is currently trading.